In short, the government creates economic incentives (rewards and bounties) to encourage whistleblowers to expose fraud against the government and other unlawful conduct. Like offering rewards for wanted criminals, governments throughout time have found that the most efficient and effective way to expose fraud and unlawful conduct was to encourage private citizens through rewards to identify and expose unlawful practices, criminals, and criminal conduct.
Modern Whistleblower Reward law uses a combination of economic rewards and whistleblower protections to encourage persons with specialized and original knowledge of significant fraud to step forward and blow the whistle on unlawful conduct. These whistleblower reward laws not only make retaliation against whistleblowers that are exposing significant fraud a federal crime, but also can provide confidentiality protections that protect the identity of whistleblowers that are represented by an attorney.
Economic Incentives to Encourage Whistleblowers to Expose Fraud Against the Government and other Unlawful Conduct
Economic Incentives including rewards and bounties have been an extremely effective method of identifying unlawful conduct, crime, and criminals. When the government offers the economic reward to a private citizen for exposing fraud against the government, such actions are called "qui tam actions". In these actions, the plaintiff is suing on their own behalf as well for the government and taxpayers.
The qui tam provisions of the False Claims Act are based on the theory that one of the least expensive and most effective means of preventing frauds on taxpayers and the government is to make the perpetrators of government fraud liable to actions by private persons acting under the strong stimulus of personal ill will or the hope of gain.
The strong public policy behind creating an economic gain for whistleblowers is that the government would be significantly less likely to learn of the allegations of fraud, but for persons in certain positions with specialized knowledge of fraud that has been committed. Congress has made it clear that creating this economic incentive is beneficial not only for the government, taxpayers, and the realtor, but is an efficient method of regulating government to prevent fraud and fraudulent schemes.
The central purpose of the qui tam provisions of the False Claims Act is to set up incentives to supplement government regulation and enforcement by encouraging whistleblowers with specialized knowledge of fraud going on in the government to blow the whistle on the crime.
Similarly, new bounty actions work under the same premise. By encouraging private citizens with specialized knowledge of financial fraud, the government is seeking to deter investment fraud, securities fraud, SEC violations, retirement fund fraud, corporate malfeasance, and other forms of financial fraud by offering rewards or bounties to persons that properly expose this fraud.
History of Whistleblowers Lawsuits, Government Fraud Lawsuits, and Qui Tam Lawsuits
Governments have long had trouble with unscrupulous government contractors defrauding the government by providing defective goods, over billing services, and seeking payment for goods and services never provided. The solution that many governments have created is to set up economic incentives for whistleblowers with inside information of fraudulent government contracts to blow the whistle on government contractors that are committing fraud.
Qui tam actions were used in the 13th century England as a way to enforce the King's laws. These actions have existed in the United States since colonial times, and were embraced by the first U.S. Congress as a way to enforce the laws when the new federal government had virtually no law enforcement officers.
During the Civil War, corrupt military contractors were defrauding the United States Army out of hundreds of thousands of dollars and putting troops at risk by supplying troops with defective products and faulty war equipment. Illegal price gouging was a common practice and the armed forces of the United States suffered. In response, Abraham Lincoln enacted the Federal Civil False Claims Act. A key provision of the act was known as qui tam.
This Act was weakened in 1943 during World War II while the government rushed to sign large military procurement contracts. However, it was strengthened again in 1986 after a long period of and increase in military spending as well as many stories of defense contractor price gouging and government waste.
Qui Tam Federal False Claims Act Whistleblower Lawsuits
Whistleblower Reward Laws are the most effective method for identifying and preventing large scale fraud against the government, in financial markets, and in large corporations. New whistleblower reward laws have harnessed the power of economic incentives by offering large monetary rewards to whistleblowers that properly report significant fraud. These whistleblower recovery laws include Qui Tam Actions and Bounty Actions. Below is a discussion of Qui Tam False Claim Actions and provisions of the Act that show how the whistleblower seeking reward (relator) may qualify for compensation of up to 30% of any money recovered by the government from the original and specialized information provided by the whistleblower.
In 1986 as a result of increased government contractor fraud, Congress amended the False Claims Act in order to make it easier for whistleblowers to file claims against fraudulent corporations and individuals.
The 1986 Amendment defines a "claim" as:
"...any request or demand which is made to a contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is requested or demanded, or if the government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded."
The whistleblower's share of recovery is a maximum of 30 percent and the government's prior knowledge of fraud now does not necessarily bar a whistleblower from collecting lost revenue. If the government took over the lawsuit, the relator can "continue as a party to the action." The defendant is also required to pay for the relator's attorney fees. The whistleblower is also protected from retaliatory actions by his or her employer. As a result or the amendment, qui tam lawsuits increased dramatically. Though the amendment was first made fore corrupt defense contractors, the amendment has uncovered billions of dollars in health care fraud.
Anyone who defrauds the government out of revenue can be held accountable under the False Claims Act. Common defendants include defense contractors, health care providers, other government contractors & subcontractors, state and local government agencies, and private universities. Whistleblowers often include current and former employees of the defrauding company, competitors of government contractors and public interest groups.
The False Claims Act was enacted to encourage private citizens to assist the government in the fight against fraud. Often the whistleblower faces an uphill battle as large, powerful corporations or individuals are usually named as defendants. An experienced attorney in qui tam claims may help you gain a percentage of stolen government funds.
Qui tam actions typically revolve around false claims that are either directly or indirectly presented to the Government for "payment or approval." These false claims can be generated through the submission of false bills, records, statements or other representations made to the Government.
For information on this web site or Qui Tam Whistle Blower Litigation, feel free to contact Medicare Fraud, Tricare Fraud, and Hospice Fraud Qui Tam Claim Lawyer, Jason S. Coomer.
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